Employees across South Africa have been working from home since President Cyril Ramaphosa declared a national state of disaster on 15 March 2020.
Working from home carries a few additional costs to employees, which include higher data use, telephone calls, stationery, and wear and tear on assets.
Many employees who currently work from home have asked whether they can get a tax break because of these increased expenses.
The Income Tax Act (ITA) does indeed allow for deductions for home office expenditure if certain conditions are met.
These deductions are available to both salaried employees who work flexible hours and employees who work from home due to COVID-19.
Unicus Tax Specialists said deductions for home office expenses may only be claimed by an employee on condition that:
- The employee spends more than 50% of their working hours in their home office.
- More than 50% of the employees’ remuneration consists of commission income;
- The employee has identified a specific part of their residential home to use as a “home office”, and uses this part regularly and exclusively for work purposes.
- The employee’s office needs to be furnished with specific equipment or tools that are specific to the employee’s trade or profession.
Unicus Tax Specialists said there is nothing in the ITA requirements to suggest that the home office deduction applies only to persons who will work from home indefinitely.
It is also not required for the full period of their employment, or that people who temporarily work from home due to circumstances like the lockdown should be excluded.
Unicus Tax Specialists said that provided that all the requirements are met, employees working from home even for a limited time due to the outbreak of COVID-19 may be eligible for the home office deductions.
They added that office expenses typically include things like telephone bills, Internet expenses, rent, interest on bond repayments, cleaning expenses, repairs, and stationery.
Tax Consulting SA legal opinion
Legal tax experts Darren Britz and Laurence Mbokwane from Tax Consulting SA said many South Africans who worked from home due to the lockdown will not yet be able to claim home office expenses.
They said people who are in a traditional employer-employee relationship earning a salaried income have the expectation and general understanding that the employer is responsible for business expenses.
There are therefore no automatic deductions employees can rely on to claim expenses.
The most important test for claiming expenses, they said, is that the person must have spent at least 50% of their time in a tax year working from home.
“This means that people will have to continue working from home until at least the end of September for them to be able to claim – six months since lockdown,” they said.
The employee will also be required to prove to the South African Revenue Service (SARS) that they have created a dedicated area in their home where they conduct their trade.
“This is not simply a table in the corner of a room. It must resemble an office when SARS comes knocking,” they said.
“Only then will they be able to claim expenses such as a portion of the rental or interest on bond payments, electricity costs, and other office expenses such as stationery, airtime, and data costs.”
Britz and Mbokwane said people who have been working from home temporarily and just “made-do” in the short term – using the dining room table as their workspace – should abandon claims for tax deductions.
However, people who earn more than 50% of their income through commission or qualify as independent contractors remain entitled to claim their businesses expenses as they have been doing before the imposition of the lockdown.